Tightening the monitoring and regulations of exempted provident funds, the Employees Provident Fund Organisation has ordered fresh audit of such funds “where considered necessary”.
In an internal circular, additional central provident fund commissioner PK Udgata directed all regional heads to ask for re-audit of exempted PFs which do not conform with the rules. “Regional provident fund commissioners are also advised to take action wherever they find that the audit reports are not coming properly,” he said in a letter to regional heads. The EPFO did not name the exempted PFs where it feels a re-audit is necessary.
Exempted PFs are under close scrutiny after several anomalies have come to attention. The EPFO suspects that some of the exempted PFs may have flouted rules and invested about R10,000-12,000 crore of employees’ money in PSU bonds that are not guaranteed by the respective state governments.
While the process is on to strengthen monitoring, the EPFO is also thinking of tightening investment norms of exempted provident funds that manage over R1.6 lakh crore of long-term savings.
Many big corporates and PSUs have their own PFs and are classified as “exempted” funds, which are allowed to get their accounts audited separately. However, the EPF Act allows EPFO to oversee the books. Exempted PFs also follow a different investment pattern as against the stringent norms prescribed for unexempted PFs that come under EPFO.